Construction Sector Boom – Mughal Steel on way to public listing to raise funds for expansion/modernization

Lahore, February 10, 2015 (PPI-OT): Mughal Steel, one of the leading composite steel manufacturing concerns of Pakistan, has got the approval of the Securities and Exchange Commission of Pakistan (SECP) for the issuance of 27.35Mn shares to the general public and thereby become a listed company at the Pakistani Stock Exchanges. The book building is scheduled on 16th Feb, 2015. It has been decided that the representatives on the three stock exchanges will be deputed at the bid collection centers.

The book-building portion of the offer comprise of 75 percent of the offering (i.e. 9.75 million ordinary shares) offering to institutional investors and high net worth individuals through book-building, whereas the remaining 25 percent of the offer (3.25 million shares) will be offered to the general public at a strike price determined during the book building process.

Mughal Iron and Steel Industry Limited has been in the industry for over 50 years, and is the largest manufacturer of long rolled iron and steel products in Pakistan. Over the years, the Company has emerged to be recognized as the most innovative, efficient and diversified steel manufacturers of Pakistan. Throughout its history, the Company has continued to prioritize investment in cutting edge technology to ensure a very high quality product range.

Mughal Steel is one of the rare steel industry manufacturers of the country with its own gas-fired captive power plant of 9.3MW which provides a third of the power requirements of the Company. Furthermore, the Company has also invested heavily in its own coal gasification plant to produce syngas as a substitute to natural gas. During the last four years, the Company has achieved a strong CAGR of 25% with over 9 times increase in net profits. In 2013-2014, the company posted a revenue of PKR 5.86Bn with 62% domestic and 38% export sales.

Through the upcoming public offering, Mughal Steel plans to raise funds between PKR 547Mn to 929 Mn in order to acquire a new 7.5MW induction furnace and to balance modernize and replace its existing manufacturing facilities. The new melting furnace will be installed in continuation of the existing production facilities to reduce overall cost of production and will have an annual production capacity of 144,000 M/T.

Mughal Steel also envisages that the fresh funds from the general public would enable it to expand the “Direct Rolling” production for the tandem section mill acquired in 2013 with an annual capacity of 300,000 M/T. The Company envisages that the up-gradation / BMR of the existing Re-rolling mill will result in 30% increased production and will facilitate growth in the profit margins through reduced manufacturing costs.